Frederick Mortensen Hinch Edward Mills John.

American notary and commissioner of deeds manual: the general and statutory ... online

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ment containing the words, "I promise to pay," is signed by two or
more persons, they are deemed to be jointly and severally liable thereon.

Sec. 18. Liable for signature — No person is liable on the instrument
whose signature does not appear thereon, except as herein otherwise
expressly provided. But one who signs in a trade or assumed name
will be liable to the same extent as if he had signed in his own name.

See. 19. Signature by agent — ^The signature of any party may be
made by a duly authorized agent. No particular form of appointment
is necessary for this purpose; and the authority of the agent may be
established as in other cases of agency.

See. 20. Liability of agent signing— Where the instrument contains,
or a person adds to his signature, words indicating that he signs for
or on behalf of a principal, or in a representative capacity, he is
not liable on the instrument if he was duly authorized; but the mere
addition of words describing him as an agent, or as filling a representa-
tive character, without disclosing his principal, does not exempt him
from personal liability.

See. 21. A signature by "procuration*' operates as notice that the
agent has but a limited authority to sign, and the principal is bound
only in case the agent in so signing acted within the actual limits of
his authority.

See. 22. The Indorsemmit or assignment of the instrument by a
corporation ox by an Infant passes the property therein, notwithstand-
ing that from want of capacity the corporation or infant may incur
no liability thereon.

See. 23. Where a signatoxe is forged or made without the authority



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296 NOTARIES PUBLIC. [§ 450

of the person whose signature it purports to be^ it is whollj inoperative,
and no right to retain the instrument or to give a discharge therefor,
or to enforce payment thereof against any party thereto, can be ac-
quired through or under such signature^ unless the party against whom
it is sought to enforce such right, is precluded from setting up the
forgery or want of authority.

ABTICLEIL
OONSIDBBATION.

Sec. 24. Vatnable consideratioii — Every negotiable instrument is
deemed prima facie to have been issued for a valuable consideration;
and every person whose signature appears thereon to have become a
party thereto for value.

Sec. 25. Wliat constitotM Talno— Value is any consideration suffi-
cient to support a simple contract. An antecedent or pre-existing debt
constitutes value; and is deemed such whether the instrument is pay-
able on demand or at a future time. •

Sec. 26. Holder for yalud— Where value has at any time been given
for the instrument, the holder is deemed a holder for value in respect
to all parties who became such prior to that time.

Sec. 27. Holder has lien— Where the holder has a lien on the in-
strument, arising either from contract or by implication of law, he
is deemed a holder for value to the extent of his lien.

Sec. 28. Absence or failure of conslderatiQii is matter of defense
as against any person not a holder in due course; and partial failure of
consideration is a defense pro tanto whether the failure is an ascer-
tained and liquidated amount or otherwise.

Sec. 29. An accommodation party is one who has signed the in-
strument as maker, drawer, acceptor, or indorser, without receiving
value therefor, and for the purpose of lending his name to some other
person. Such a person is liable on the instrument to a holder for
value, notwithstanding such holder at the time of taking the instru-
ment knew him to be only an accommodation party.

ABTIOLE nL
NEGOTIATION.

Sec. 30. Negotiated; transferred— An instrument is negotiated when
it is transferred from one person to another in such manner as to con-
stitute the transferee the holder thereof. If payable to bearer it is
negotiated by delivery; if payable to order it is negotiated by the
indorsement of the holder completed by delivery.

Sec. 31. The Indorsement must be written on the instrument itself
or upon a paper attached thereto. The signature of the indorser, with-
out additional words, is a sufficient indorsement.

Sec. 32. Indorsement entire— The indorsement must be an indorse-



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§ 450] NEGOTIABLE INSTRUMENTS. 297

ment of the entire instrument. An indorsement which purports to
transfer to the indorsee a part only of the amount payable, or which
purports to transfer the instrument to two or more indorsees severally,
does not operate as a negotiation of the instrument. But where the
instrument has been paid in part, it may be indorsed as to the residue.

Sec. 33. Indorsement special or blank — ^An indorsement may be
either special or in blank; and it may also be either restrictive or
qualified, or conditional.

See. 34. A QMcial indoieement specifies the person to whom, or
to whose order, the instrument is to be payable; and the indorsement
of such indorsee is necessary to the further negotiation of the instru-
ment. An indorsement in blank specifies no indorsee, and an instrument
so indorsed is payable to bearer, and may be negotiated by delivery.

Sec. 35. The holder may convert a blank IndozMment into a special
indorsement by writing over the signature of the indorser in blank any
contract consistent with the character of the indorsement.

Sec. 3ft. An IndonMsnent Is restrictive which either (1) prohibits
the further negotiation of the instrument,' or (2) constitutes the in-
dorsee the agent of the indorser, or (3) vests the title in the indorsee
in trust for or to the use of some other person. But the mere absence
of words implying power to negotiate does not make an indorsement
restrictive.

Sec. 37. Effect of restrictive indorsement— A restrictive indorse-
ment confers upon the indorsee the right (1) to receive payment of
the instrument, (2) to bring any action thereon that the indorser could
bring, (3) to transfer his rights as such indorsee, where the form of
the indorsement authorizes him to do so. But all subsequent indorsees
acquire only the title of the first indorsee under the restrictive in-
dorsement.

Sec. 38. A qualified Indorsement constltates the indorser a mere
assignor of the title to the instrument. It may be made by adding to
the indorser 's signature the words "without recourse," or any words
of similar import. Such an indorsement does not impair the negotiieible
character of the instrument.

See. 39. Where an Indorsement is conditional, a party required to
pay the instrument may disregard the condition, and make payment
to the indorsee or his transferee, whether the condition has been ful-
filled or not. But any person to whom an instrument so indorsed is
negotiated will hold the same, or the proceeds thereof, subject to the
rights of the person indorsing conditionally.

Sec. 40. Indorsement payable to bearer— Where an instrument,
payable to bearer, is indorsed specially, it may nevertheless be further
negotiated by delivery; but the person indorsing specially is liable as
indorser to only such holders as make title through his indorsement.

Sec. 41. Payable to ordei^-Where an instrument is payable to the
order of two or more payees or indorsees who are not partners, all must
indorse, unless the one indorsing has authority to indorse for the
others.







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298 NOTARIES PUBUO. [§ 450

See. 42. Dr»wn or Indorsed to caslitor — ^Where an inBtiument is
drawn or indorsed to a person as ''cashier" or other fiscal officer of an
bank or corporation, it is deemed prima facie to be payable to the
bank or corporation of which he is such officer; and msj be nego-
tiated by either the indorsement of the bank or corporation, or the
indorsement of the officer.

Sec. 43. Wrong names — ^Where the name of a payee or indorsee is
wrongly designated or misspelled, he may indorse the instrument as
therein described, adding, if he thinks fit, his proper signature.

Sec. 44. Sepresentatiye indorsement— Where any person is under
obligation to indorse in a representative capacity, he may indorse in
such terms as to negative personal liability.

Sec. 45. Data of Indorsement — ^Except where an indorsement bears
date after the maturity of the instrument, every negotiation is deemed
prima facie to have been effected before the instrument was overdue.

Sec. 46. Place of Indorsement — ^Except where the contrary appears,
every indorsement is presumed prima facie to have been made at the
plaee where the instrument is dated.

Sec 47. Negotiable nntU paid— An instrument negotiable in its
origin continues to be negotiable until it has been restrictively in-
dorsed or discharged by payment or otherwise.

See. 48. The holder may at any time strike <mt any indorsement
which is not necessary to his title. The indorser whose indorsement
is struck out, and all indorsers subsequent to him, are thereby relieved
from liability on the instrument.

Sec. 49. Effect of transfer witbout Indorsement— Where the holder
of an instrument payable to his order transfers it for value without
indorsing it, the transfer vests in the transferee such title as the
transferer had therein, and the transferee acquires, in addition, the
right to have the indorsement of the transferer. But for the purpose
of determining whether the transferee is a holder in due course, the
negotiation takes effect as of the time when the indorsement is
actually made.

Sec. 50. Where an instmmeot Is negotiated back to a prior party,
such party may, subject to the provisions of this act, reissue and fur-
ther negotiate the same. But he is not entitled to enforce payment
thereof against any intervening party to whom he was personally
liable.

AETICMSIV.
BIGHTS OP THE HOLDBB.

See. 51. Holder may sue— The holder of a negotiable instrument
may sue thereon in his own name; and payment to him in due course
discharges the instrument.

Sec. 52. A holder In dne cocmw is a holder who has taken the In-
strument under the following conditions: (1) That it is complete and
regular upon its face, (2) that he became the holder of it before it was



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$ 460] NEGOTIABLE INSTRUMENTS.

overdue, and without notice that it had been previously dishonored^ if
such was the fact; (3) that he took it in good faith and for value; (4)
that at the time it was negotiated to him he had no notice of any in-
firmity in the instrument or defect in the title of the person negotiat-
ing it.

Sec. 53. A holder not In dne conxsa— Where an instrument payable
on demand is negotiated an unreasonable length of time after its issue,
the holder is not deemed a holder in due course.

Sec. 54. Notice before full amount paid — ^Where the transferee re-
ceives notice of any infirmity in the instrument or defect in the
title of the person negotiating the same before he has paid the full
amount agreed to be paid therefor, he will be deemed a holder in due
course only to the extent of the amount theretofore paid by him.

Sec. 55. Title defective— The title of a person who negotiates an
instrument is defective within the meaning of this act when he ob-
tained the instrument, or any signature thereto, by fraud, duress, or
force and fear, or other unlawful means, or for an illegal consideration,
or when he negotiates it in breach of faith, or under such circum-
stances as amount to a fraud.

Sec. 56. Notice of defect — To constitute notice of an infirmity in
the instrument or defect in the title of the person negotiating the
same, the person to whom it is negotiated must have had actual
knowledge of the infirmity or defect, or knowledge of such facts that
his action in taking the instrument amounted to bad faith.

Sec. 57. A holder in dne course holds the instrument free from any
defect of title of prior parties, and free from defenses available to
prior parties among themselves, and may enforce payment of the instru-
ment for the full amount thereof against all parties liable thereon.

Sec. 58. When subject to the eame defenses — ^In the hands of any
holder other than a holder in due course, a negotiable instrument is
subject to the same defenses as if it were non-negotiable. But a holder
who derives his title through a holder in due course, and who is not
himself a party to any fraud or illegality affecting the instrument,
has all the rights of such former holder in respect of all parties prior
to the latter.

Sec. 59. Every holder is deemed prima facie to be a holder In dne
course; but when it is shown that the title of any person who has
negotiated the instrument was defective, the burden is on the holder to
prove that he or some person under whom he claims acquired the title
as a holder in due course. But the last mentioned rule does not apply
in favor of a party who became bound on the instrument prior to the
acquisition of such defective title.



i



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300 NOTARIES PUBUO. [§ 460

ABTIGLE V.
IJABIUTIES OF PABTIB8.

See. 60. TlM mftktr of a negotiable instroment bj makjiif it en-
gages that he will paj it aecording to its tenor; and admits the exist-
ence of the payee and his then capacity to indorse.

See. 61. The drawer by drawing the instmment admits the exist-
ence of the payee and his then capacity to indorse; and engages that
on dne presentment the instmment will be accepted or paid, or both,
according to its tenor, and that if it be dishonored, and the necessary
proceedings on dishonor be dnly taken, he will pay the amount thereof
to the holder, or to any subsequent indorser who may be compelled to
pay it. But the drawer may insert in the instrument an express stipu-
lation negativing or limiting his own liability to the holder.

Sec. 62. The acceptor by accepting the instrument engages that he
will pay it according to the tenor of his acceptance; and admits (1) the
existence of the drawer, the genuineness of his signature, and his
capacity and authority to draw the instrument; and (8) the existence
of the payee and his then capacity to indorse.

Sec. 63. IndOTser — A person placing his signature upon an instru-
ment otherwise than as maker, drawer, or acceptor is deemed to be
an indorser, unless he clearly indicates by appropriate words his inten-
tion to be bound in some other capacity.

See. 64. Irregular indoner - Where a person, not otherwise a party
to an instrument, places thereon his signature in blank before delivery,
he is liable as indorser in accordance with the following rules: (1) If
the instrument is payable to the order of a third person, he is liable
to the payee and to all subsequent parties. (2) If the instrument is
payable to the order of the maker or drawer, or is payable to bearer,
he is liable to all parties subsequent to the maker or drawer. (3) If
he signs for the accommodation of the payee, he is liable to all parties
subsequent to the payee.

Sec. 65. Warranty by delivery or Indoreement — ^Every person nego-
tiating an instrument by delivery or by a qualiHed indorsement, war-
rants (1) that the instrument is genuine and in all respects what it
purports to be; (2) that he has a good title to it; (3) that all prior
parties had capacity to contract; (4) that he has no knowledge of
any fact which would impair the validity of the instrument or render
it valueless. But when the negotiation is by delivery only, the war-
ranty extends in favor of no holder other than the immediate transferee.
The provisions of subdivision three of this section do not apply to per-
sons negotiating public or corporate securities, other than bills and
notes.

Sec. 66. General Indoraer^-Every indorser who indorses without
qualification warrants, to all subsequent holders in due course, (1)
the matters and things mentioned in subdivisions one, two,, and three
of the next preceding section and (2) that the instrument is at the
time of his indorsement valid and subsisting. And, in addition, he



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§ 450] NBOOTIABLE INSTRUMENTS. 301

^nghges that on due presentmeiit, it shall be accepted or paid, or both,
as the case maj be, according to its tenor, and that if it be dishonored,
and the necessary proceedings on dishonor be duly taken, he will pay
the amount thereof to the holder, or to any subsequent indorser who
may be compelled to pay it.

Sec. 67. Liability of indoraer — Where a person places his indorse-
ment on an instrument negotiable by delivery he incurs all the liabilities
of an indorser.

Sec 68. Liable in order of indorsemoiit — ^Aa respects one another,
indorsers are liable prima facie in the order in which they indorse;
but evidence is admissible to show that as between or among them-
selves they have agreed otherwise. Joint payees or joint indorsees
who indorse are deemed to indorse jointly and severally.

Sec. 69. Where a broker or other agent negotiates an instrument
without indorsement, he incurs all the liabilities prescribed by section
66 of this act, unless he discloses the name of his principaly and the
fact that he ia acting only as agent.

ABTICLE VL
PBBSENTMENT FOB PAYMENT.

Bee. 70. Want of demand on principal— Presentment for payment
is not necessary in order to charge the person primarily liable on the
instrument; but if the instrument is, by its terms, payable at a special
place, and he is able and willing to pay it there at maturity, such
ability and willingness are equivalent to a tender of payment upon
his part. But except as herein otherwise provided, presentment for
payment is necessary in order to charge the drawer and indorsers.

Sec. 71. Where the instrument ia not payable on demand, pre-
sentment must be made on the day it faUs due. Where it is payable
on demand, presentment must be made within a reasonable time after
its issue, except that in the case of a biU of exchange, presentment
for payment will be sufficient if made within a reasonable time after
the last negotiation thereof.

Sec. 72. Preeentment for payment, to be eufflcient, must be made
(1) by the holder, or by some person authorized to receive payment
on his behalf; (2) at a reasonable hour on a business day; (3) at a
proper place, as herein defined; (4) to the person primarily liable on
the instrument, or, if he is absent or inaccessible, to any person found
at the place where the presentment is made.

Sec. 73. Presentment for payment ia made at the proper place:
(1) Where a place of payment is specified in the instrument and it is
there presented; (2) where no place of payment is specified but the
address of the person to make payment is given in the instrument and
it is there presented; (3) where no place of payment is specified and
no address is given and the instrument is presented at the usual place
of business or residence of the person to make payment; (4) in any
other case, if presented to the person to make payment wherever he



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302 N0TABIE8 PUBLIC. [{ 450

can be found, or if presented at his last known plaee of buainesa or
residence.

Sec. 74. Tlie Instxument must be «zhiblted to the person from whom
payment is demanded, and when it is paid must be delivered up to the
party paying it.

See. 75. Where the instrument Is payable at a bank, presentment
for payment must be made during banking hours, unless the person to
make payment has no funds there to meet it at any time during the
day, in which case presentment at any hour before the bank is closed
on that day is sufficient.

Sec. 76. Drawer dead — Where the person primarily liable on the
instrument is dead, and no place of payment is specified, presentment
for payment must be made to his personal representative, if such there
be, and if with the exercise of reasonable diligence, he can be found*

Sec. 77. Partners — ^Where the persons primarily liable on the in-
strument are liable as partners, and no place of payment is specified,
presentment for payment may be made to any one of them, even
though there has been a dissolution of the firm.

Sec. 78. Joint debtors — ^Where there are several persons, not part-
ners, primarily liable on the instrument, and no plaee of payment is
specified, presentment must be made to them all.

Sec. 79. Presentment for payment is not required in order to charge
tbe drawer where he has no right to expect or require that the drawee
or acceptor will pay the instrument.

Sec. 80. Presentment for payment is not required in order to charge
an indorser where the instrument was made or accepted for his ae-
eommodation, and he has no reason to expect that the instrument will
be paid if presented.

Sec. 81. Delay in making presentment for payment is excused when
the delay is caused by circumstances beyond the control of the holder,
and not imputable to his default, misconduct, or negligence. When
the cause of delay ceases to operate, presentment must be made with
reasonable diligence.

Sec. 82. Presentment for payment is dispensed with: (1) Where
after the exercise of reasonable diligence presentment as required by
this act cannot be made; (2) where the drawee is a fictitious person;
(3) by waiver of presentment, express or implied.

Sec. 83. The instrument is dishonored by nonpayment when (1) it
is duly presented for payment and payment is refused or eannot be
obtained, or (2) presentment is excused and the instrument is overdue
and unpaid.

Sec. 84. Persons secondarily liable — Subject to the provisions of
this act, when the instrument is dishonored by nonpayment, an imme-
diate right of recourse to all parties secondarily liable thereon, accrues
to the holder.

Sec. 85. Days of grace; maturity— Every negotiable instrument is
payable at the time fixed therein without grace. When the day of
maturity falls upon Sunday or a holiday, the instrument is i>ayable



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§ 450] KEOOTIABLB INSTRUMENTS. 303

on the next ineceeding business day. Instrmnents falling dne on
Saturday are to be presented for payment on the next succeeding busi-
ness day, except that instruments payable on demand may, at the
option of the holder, be presented for payment before twelve o'clock
noon Saturday when that entire day is not a holiday.

Sec. 86. Time; after date; sight; how computed— Where the instru-
ment is payable at a fixed period after date, after sight, or after the
happening of a specified event, the time of payment is determined by
excluding the day from which the time is to begin to run, and by in-
cluding the date of payment.

Sec. 87. Where the inetnunent Is made payable at a bank it is
equivalent to an order to the bank to pay the same for the account of
the principal debtor thereon.

Sec. 88. Payment is made in due course when it is made at or after
the maturity of the instrument to the holder thereof in good faith and
without notiee that his title is defective.

ABTICLE VTL
NOTICE OF DISHONOB.

See. 89. Kotiee to whom — ^Except as herein otherwise provided,
when a negotiable instrument has been dishonored by nonacceptanee
or nonpayment, notiee of dishonor must be given to the drawer and to
each indorser, and any drawer or indorser to whom such notice is not
given is discharged.

Sec. 90. Notice for whom — ^The notice may be given by or on behalf
of the holder, or by or on behalf of any party to the instrument who
might be compelled to pay it to the holder, and who, upon taking it
up, would have a right to reimbursement from the party to whom the
notice is given.

Sec. 91. Notice by agent — ^Notice of dishonor may be given by an
agent either in his own name or in the name of any party entitled to
give notice, whether that party be his principal or not.

Sec. 92. Effect of notice for holder — Where notice is given by or
on behalf of the holder, it inures for the benefit of all subsequent
holders and all prior parties who have a right of recourse against the
party to whom it is given.

Sec. 93. Effect of notice by party entitled to— Where notice is
given by or on behalf of a party entitled to give notice, it inures
for the benefit of the holder and all parties subsequent to the party
to whom notice is given.

Sec. 94. Wlien agent may give notice— Where the instrument has
been ditihonored in the hands of an agent, he may either himself give
notice to the parties liable thereon, or he may give notice to his
f>rlncipa1. If he give notice to his principal, he must do so within the
same time as if he were the holder, and the principal upon the receipt
of such notice has himself the same time for giving notiee as if the
agent had been an independent holder.



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304 NOTARIES PUBLIC. [§ 450

Bee. 05. Wli«ii notice gnflclcnt — A written notice need not* be signed



Online LibraryFrederick Mortensen Hinch Edward Mills JohnAmerican notary and commissioner of deeds manual: the general and statutory ... → online text (page 36 of 50)